By Senad Karaahmetovic
MoffettNathanson analysts initiated research coverage on Roblox (NYSE:RBLX) with an Underperform rating and a $19 per share price target.
While the analysts acknowledge that Roblox built an “undeniably powerful interactive entertainment platform,” they also note that experiences are “lightweight and derivative of concepts already well-developed on other platforms.”
The analysts are also cautious about Roblox’s plans as the company “seems to want to pivot the narrative to a distant and, in our view, rose-colored, picture of the future.” All this while the market is “increasingly fraught about the here and now.”
On a more positive note, they see a “reasonably good” margin profile, but that’s not enough for them to get more constructive on Roblox shares.
“We’re just not sure Roblox’s reality will be as grand as its vision. In a market looking for less evangelism and more “meat on the bone,” there’s plenty of room for the market to lose confidence,” they further wrote in an initiation note.
The analysts' price target of $19 implies a downside risk of almost 50% compared to Friday’s closing price of $35.84.
Roblox shares are trading modestly lower in pre-open Monday.